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NOW was recently trading at $133.12 and has an implied volatility of 31.60% for this period. Based on an analysis of the options available for NOW expiring on 16-Feb-2018, there is a 34.14% likelihood that the underlying will close within the analyzed range of $133.90-$149.70 at expiration. In this scenario, the average linear return for the trade would be 70.60%.

52 week high: SERVICENOW recently reached a new 52-week high at $133.25. NOW had traded in the range $74.63-$131.26 over the past year.

Trade approach: Reaching a new 52-week high is a bullish indicator, so this trade is designed to be profitable if NOW maintains its current direction and does not revert back to pricing on the bearish side of $133.12 on 16-Feb-2018. If possible, the trade has been padded such that slight movement against the trade would still return a profit.

Upside potential: Using this bullish strategy, the trade would be profitable if SERVICENOW closes at or above $132.90 on 16-Feb-2018. Based on our risk-neutral analysis, there is a 52.67% likelihood of this return.

Downside risk: As with any options trade, there is a substantial downside risk where you may lose most or all of your investment.